Correlation Between Trainline Plc and Impax Environmental
Can any of the company-specific risk be diversified away by investing in both Trainline Plc and Impax Environmental at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Trainline Plc and Impax Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trainline Plc and Impax Environmental Markets, you can compare the effects of market volatilities on Trainline Plc and Impax Environmental and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Trainline Plc with a short position of Impax Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trainline Plc and Impax Environmental.
Diversification Opportunities for Trainline Plc and Impax Environmental
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Trainline and Impax is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Trainline Plc and Impax Environmental Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impax Environmental and Trainline Plc is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Trainline Plc are associated (or correlated) with Impax Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impax Environmental has no effect on the direction of Trainline Plc i.e., Trainline Plc and Impax Environmental go up and down completely randomly.
Pair Corralation between Trainline Plc and Impax Environmental
Assuming the 90 days trading horizon Trainline Plc is expected to generate 1.98 times more return on investment than Impax Environmental. However, Trainline Plc is 1.98 times more volatile than Impax Environmental Markets. It trades about 0.22 of its potential returns per unit of risk. Impax Environmental Markets is currently generating about -0.14 per unit of risk. If you would invest 40,520 in Trainline Plc on September 14, 2024 and sell it today you would earn a total of 2,960 from holding Trainline Plc or generate 7.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trainline Plc vs. Impax Environmental Markets
Performance |
| Timeline |
| Trainline Plc |
| Impax Environmental |
Trainline Plc and Impax Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trainline Plc and Impax Environmental
The main advantage of trading using opposite Trainline Plc and Impax Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trainline Plc position performs unexpectedly, Impax Environmental can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Impax Environmental will offset losses from the drop in Impax Environmental's long position.| Trainline Plc vs. Charter Communications Cl | Trainline Plc vs. Schroders Investment Trusts | Trainline Plc vs. Taylor Maritime Investments | Trainline Plc vs. Spirent Communications plc |
| Impax Environmental vs. Trainline Plc | Impax Environmental vs. Vitec Software Group | Impax Environmental vs. EVS Broadcast Equipment | Impax Environmental vs. Iron Mountain |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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